LNG

The East African nation of Tanzania said contract preparations are under way with Norwegian energy major Equinor and UK-based Shell to construct a $30 billion liquefied natural gas export project.

Oct 12 (LNGJ) - The 174,000 cubic metres capacity LNG carrier “British Listener” is scheduled to arrive this weekend in the Rovuma Basin of Mozambique, according to shipping data. The arrival coincides with expectations of the first commercial cargo lifting from the “Coral-Sul FLNG” floating production project. The destination of “British Listener” is listed as Porto Amelia in Cabo Delgado province near where the FLNG hull is deployed.

   The “Coral-Sul FLNG” production vessel has been receiving gas from the Rovuma Basin resources for the start of annual output of 3.4 million tonne per annum. Italy’s Eni is upstream operator of the FLNG project along with Area 4 licence partners ExxonMobil Corp., China National Petroleum Corp., Galp Energia of Portugal, Korea Gas Corp. and Mozambique’s ENH, the state energy company.

One of the world’s main liquefied natural gas projects, Mozambique LNG, is threatened with a long-term delay because of growing terrorist attacks by Islamist groups that have led to urgent travel warnings by nations like the US and the UK and with France now stating that a large-scale “humanitarian crisis” could develop.

Sasol, the South African petrochemicals and fuel company, has appointed investment banking advisers to sell its stakes in a power plant in Mozambique and a natural gas pipeline running from the southeast African future LNG exporter into South Africa.

ExxonMobil confirmed it was delaying a final investment decision for the Rovuma liquefied natural gas project in Mozambique, probably into 2021 at the earliest, but US Gulf Coast spending plans remain on track.

The FID had been expected for later in 2020, though the US major said it was continuing to actively work with its partners and the government to optimize development plans.

The Coral LNG development continues offshore Mozambique continues as planned.

The Mozambique update came in a statement from ExxonMobil saying it was reducing its 2020 capital spending by 30 percent and lowering cash operating expenses by 15 percent in response to low commodity prices resulting from oversupply and demand weakness from the Covid-19 pandemic.

“Capital investments for 2020 are now expected to be about $23 billion, down from the previously announced $33Bln,” said ExxonMobil.

The 15 percent decrease in cash operating expenses is driven by deliberate actions to increase efficiencies and reduce costs, and includes expected lower energy costs.

“Despite the reductions, ExxonMobil expects to meet its projected investment of $20Bln on US Gulf Coast manufacturing facilities made in its 2017 'Growing the Gulf' initiative,” said the US major. This spending is mainly on refining and chemical-manufacturing projects.

The company also expects to reach its proposed US investment of $50 billion over five years announced in 2018,” it added.

ExxonMobil said in October 2019 that it planned to invest more than $500M in the initial construction phase of its Rovuma project in Mozambique as part of the Area 4 resources development with its partners, including Italian energy company Eni and China National Petroleum Corp.

“After a thorough evaluation of the impacts of the pandemic and market conditions, we have worked closely with business partners to plan and execute capital adjustments that preserve long-term value, maximize cost efficiency, and put us in the strongest position when market conditions improve,” said Darren Woods, Chairman and Chief Executive of ExxonMobi.

“The long-term fundamentals that underpin the company’s business plans have not changed - population and energy demand will grow, and the economy will rebound,” Woods added.

Exxon’s Rovuma Basin stake, jointly held with Italian firm Eni, will produce LNG from three feed-gas reservoirs located in the Area 4 block offshore Mozambique’s northern coast.

ExxonMobil is the lead company for the Mamba gas fields and LNG project development and costs are estimated at around $30Bln.

Area 4's consortium is formed by Mozambique Rovuma Ventures, comprising ExxonMobil with 25 percent, Eni with 25 percent and China’s CNPC, also known as PetroChina, with 20 percent.

The remaining 30 percent of shares in that licence are held in parcels of 10 percent by South Korean utility and energy company Korea Gas Corp., Galp Energia of Portugal and Mozambique’s state energy compny ENH.

A separate project for Area 4 resources is the Coral floating LNG joint venture with capacity of around 3.4 MTPA already under construction and scheduled to come on stream in 2022.

ExxonMobil will lead the development of liquefaction and LNG operations on behalf of the Area 4 joint venture, while Eni will be in charge of the construction and bringing on stream of the upstream facilities.

Eni had completed its sale of a 25 percent indirect interest in the Area 4 licence block in the Rovuma Basin to ExxonMobil in November 2017.

The development plan for the first phase of the LNG venture currently specifies the design and construction of two LNG Trains, which will each produce 7.6 MTPA of LNG.

ExxonMobil said it planned to invest more than $500 million in the initial construction phase of its liquefied natural gas project in Mozambique as part of the Area 4 resources development with its partners including Italian energy company Eni and China National Petroleum Corp.

East African exploration and production is now gathering pace with Mozambique developing multiple LNG projects, Tanzania looking to monetize discovered gas reserves and now Kenya entering the race with Italian energy company Eni and Qatar Petroleum joining forces offshore.

Anadarko Petroleum, the US company that has agreed to be taken over by Occidental Petroleum and whose liquefied natural gas assets will be sold to French major Total, has awarded the main engineering contract for the onshore Mozambique LNG plant to a consortium of companies from Italy, the US and Japan.